I regularly deal with cases where a borrower’s circumstances make securing finance more involved. However, Enness’ access to a broad range of lenders can also add value in more straightforward situations. I recently assisted a returning client with a like-for-like remortgage of a rental property in South London.
The mortgage had originally been arranged by Enness, and following a positive experience, the client returned to us when it was time to review the financing on the property.
The property was valued at £1.3 million and the client’s priority was to find a suitable replacement for the existing facility. There were no unusual ownership or income circumstances, but the existing lender had stopped offering new lending and the fixed-rate period was due to expire. Without a new arrangement, the borrowing would have reverted to a Standard Variable Rate (SVR), increasing the client’s monthly costs.
There was also an affordability consideration. Rental income from the property was not sufficient to satisfy the criteria of many buy to let mortgage lenders under the lending calculations now in place. The client was also a higher-rate taxpayer, which added another factor when assessing the application.
OUR SOLUTION
Fortunately, the client had additional disposable income, meaning I could explore a top-slicing approach. This allows a lender to consider a borrower’s personal income alongside the rental income generated by the property when assessing affordability.
Taking the client’s wider income into account meant the affordability requirements could be met, opening up a wider range of options. I approached a lender known for its efficient service and was able to arrange a new two-year fixed-rate facility on suitable terms.
The refinancing allowed the client to avoid reverting to the higher SVR while retaining the existing investment property. It was another example of how reviewing the wider financial position can create options when rental income alone may not support the borrowing required.
This case demonstrates the value of reviewing a buy to let mortgage before an existing product expires. Where affordability has changed since the original borrowing was arranged, specialist lender access and a broader assessment of income can help identify suitable alternatives.
Disclaimer:
This case study is for illustrative purposes only and does not constitute financial, legal, tax or investment advice. Finance is subject to status, underwriting, affordability, property suitability and lender criteria. Terms, rates, LTVs and availability may vary depending on individual circumstances.
Risk Warning:
Your property may be repossessed if you do not keep up repayments on your mortgage or other borrowing secured against it. Property values can fall as well as rise.
Information contained in our case studies is for market and illustrative purposes only. In some cases, these may be made up of multiple cases and are for illustrative purposes only.
Some case studies are made up of enquiries that have come into the business, not all business completes, and the posting of a case study does not represent a completed piece of business.
Property values can fall as well as rise, and you may not get back the amount originally invested. Property investments can be illiquid and may take time to sell. Where borrowing is used, your property may be repossessed if you do not keep up repayments on a mortgage or other loan secured against it.
